Frankly I don't think many of them are paying attention, and they certainly don't know the first thing about the oil industry.  They tend to believe EIA reports that claim production will contintue to grow and meet demand when their own data and exploration results don't seem to support those conclusions. 

The also tend to trust OPEC when they say they have "plenty of excess capacity" and could flood the market if they wanted to.  Anyone want to guess why OPEC has not raised output over the past few years even though prices have gone through the roof and there is significant risk of demand distruction?  I hope I'm wrong and they're just greedy, but signs point to the idea that they may be pumping all out and in fact the world has NO excess capacity. 

Think of it this way, if you have 30-40% of a valuable resource and you can either pump it today at record prices and get $100+/barrel, or save it for later when you SAY prices will drop to a much lower level, what are you going to do?  Traders on the oil markets (who are playing for big stakes) have been calling their bluff.  They have been betting that they Saudi's do not in fact have the extra 2mpbd they claim to have.  However, OPEC cannot allow anyone to realize that they don't have excess capacity, otherwise they effectively have no power, or at least very little power.  They can't really lower production because most of the member states are too dependent upon the revenues to maintain power through huge subsidies and handouts and now they can't raise production because they're pumping full out.

Anyway, all basically my own analysis.  I don't claim to know all the answers or know the future, but from what I can tell from the data I can see, it seems unlikly that things will get much better anytime soon.  I could however be completely wrong, and a ramp up of investment could flood the world with oil again, but even if it does, the real peak will occur eventually the only real question is when.  What matter is, is it better to plan for the posibility that the peak will occur in 10 years and it doesn't happen for 30, or is it better to plan thinking that it won't happen for 30 years and it sneaks up on us in 10 or less?   

by alphasigmookie on 03/29/2008 05:40:42 PM EST

[ Parent ]

But at the risk of causing mass anuerisms or the nubification of troll fingers I am starting to think we should nationalize the oil industry.  If all this is true and it is as vital to our country as we all think it is just too damn important for the outcome to be "LARGEST PROFITS IN HISTORY!!!"

I say this with all due solemnity.  My grandfather was an accomplished Exxon pipeline engineer and much of my family's wealth is tied up in Exxon.  Just a reaction I start to have when I get scared by the future of oil. 

by ProfRich on 03/31/2008 12:14:56 AM EST

[ Parent ]